When you check Enable Inertia, the values for mass density, mass, inertia, center of mass, and volume associated with the CAD Geometry component are used in the simulation.
As an example, consider a model of an object with specified mass and inertia, rotating about the z-axis, constructed with Fixed Frame, Revolute, and CAD Geometry components.
With Enable Inertia selected this becomes analogous to a similar model built with Fixed Frame, Revolute, Rigid Body, and Rigid Body Frame components.
This is important to note, because if your model already contains inertia properties through the inclusion of a Rigid Body/Rigid Body Frame assembly,selecting Enable Inertia will result in these inertial properties being added again to your model (essentially from a modeling standpoint you are adding a duplicate Rigid Body/Rigid Body Frame assembly).